On the third day of the Vibhor Steel IPO, the consolidated bid details showcased an overwhelming response across various investor categories. Qualified Institutional Buyers (QIBs) showed substantial interest with a subscription rate of 178.73 times. Non-Institutional Investors demonstrated even greater enthusiasm, with their bids skyrocketing to 721.34 times the shares on offer. Retail Individual Investors (RIIs) also participated actively, marking a subscription rate of 188.17 times. Employees of the company showed strong support for their organization, with their category being subscribed at 201.48 times. Altogether, the total subscription for Vibhor Steel’s IPO on day 3 reached an impressive 298.86 times.
Vibhor Steel Tubes Limited IPO – Fundamental Analysis
The company has witnessed substantial revenue growth, escalating from ₹51,046.68 lakhs in 2021 to ₹1,11,311.90 lakhs in 2023, which underscores a robust demand for its offerings and a broadening of its business operations. Alongside, there’s been a notable rise in equity, from ₹6,048.99 lakhs in 2021 to ₹9,319.79 lakhs in 2023, mirroring growing investor trust and potentially successful efforts at securing capital to bolster expansion. The leap in profit after tax from ₹68.83 lakhs in 2021 to ₹2,106.62 lakhs in 2023 highlights the company’s efficacious scaling of operations with profitability. Moreover, the Return on Net Worth (RoNW) has seen a marked improvement, from 1.14% in 2021 to 22.60% in 2023, signifying enhanced proficiency in profit generation from shareholder equity. This is further evidenced by a significant uptick in Diluted EPS, from ₹0.49 in 2021 to ₹14.85 in 2023, reflecting increased profitability on a per-share basis.
On the financial management front, while total assets have increased indicating expansion, a rise in liabilities suggests a dependency on debt financing, with a high debt-equity ratio indicating a leveraged financial stance. Nevertheless, liquidity has remained stable as seen in the slight improvement in the current ratio, and the inventory turnover ratio indicates effective inventory management despite slight fluctuations recently.
Vibhor Steel Tubes IPO Risks And Challenges
Vibhor Steel Tubes faces several risks and challenges, including its reliance on the success and reputation of Jindal Pipes Limited. This dependency raises concerns about potential vulnerability to insolvency, market volatility, and shifts in regulatory landscapes. The company’s financial stability and business continuity could be significantly affected by adverse outcomes from ongoing legal battles involving the company, its promoters, directors, and associated group entities.
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A key aspect of their partnership with Jindal Pipes Limited is a renewed contract that guarantees a fixed selling price, a minimum order of 100,000 metric tons per year, and compensation for any shortfall, along with a 2% discount on turnover. This six-year agreement is crucial for revenue; however, any disruption could adversely affect earnings, and the mandated discounts may impact profit margins. The long-term manufacturing agreement for “Jindal Star” products underscores the company’s reliance on Jindal’s market performance and reputation, which introduces risks associated with insolvency, market shifts, and regulatory adjustments, all of which could detrimentally affect profitability. Moreover, the company’s susceptibility to legal challenges and the potential for material adverse effects on its operations and financial health underscore the significant risks posed by legal proceedings.
